"Lending Registered Loan Business Name to Illegal Private Lenders"... Loan Finance Association Seeks Damages from Name Lender

"Lending registered business names blurs the line between loan finance and illegal private lending"
"Claim amount: KRW 2,678... Trust of all 2,678 member companies at stake"

The Korea Federation of Loan Finance said on the 6th that it had filed a damages lawsuit against a person who lent their registered business name, seeking to address the damage to the reputation and trust of the loan finance industry caused by a case in which a registered loan business operator lent their business registration details to an illegal private lending organization. The lawsuit was filed with the Seoul Central District Court on the 5th.

The defendant is one person who lent their name to a loan company and was summarily indicted on charges of aiding and abetting a violation of the Loan Business Act in a case involving an illegal private lending organization announced by the Seoul Northern District Prosecution Office on September 10.

According to the prosecution office's announcement, the person is suspected of registering a loan business under their own name at the request of the organization's leader and allowing members of the organization to operate a loan business under that trade name from June 2020 to June 2021.

The organization is suspected of lending approximately KRW 400 million to 161 borrowers in a total of 1,130 transactions from February 2020 to June 2021, and collecting approximately KRW 700 million in repayments at interest rates exceeding the legal limit.

In particular, the crime structure disclosed by the prosecution office indicates that the person lent a trade name "to be used in advertisements." The association explained that this created a significant risk of financial consumers mistaking the illegal private lending organization for a properly registered business. The act violated the Loan Business Act, which prohibits loan business operators from allowing others to conduct loan business under their names or lending their registration certificates.

The association said, "Lending a registered name gives an illegal private lending organization the appearance of a properly registered business, blurring the line between regulated loan finance and illegal private lending. It also causes loan finance companies that abide by the law to be viewed as part of the same group as illegal private lenders."

The association said it had set the amount sought in the lawsuit at KRW 2,678 to demonstrate that the case concerns the reputation and trust of the entire industry. The amount was calculated by multiplying the number of the association's member companies as of the end of last month, 2,678, by KRW 1. The association explained that it was a symbolic amount intended to clarify the illegality of lending one's registered name and the responsibility involved, rather than to seek financial compensation.

After filing the complaint, the association plans to request that the court conduct a fact inquiry to identify the defendant, whose personal information has not been disclosed, and then proceed with the lawsuit.

Jeong Seongung, chairman of the Korea Federation of Loan Finance, stressed, "Registering a loan business is a promise to fulfill the obligations and responsibilities set out by law. Lending that registered name to illegal private lenders is no different from putting a 'mask' of regulated finance on them. We will hold accountable to the end anyone who undermines the trust that our 2,678 member companies have built by abiding by the law."

This content was produced with the assistance of AI translation services.